Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/240474 
Year of Publication: 
2020
Series/Report no.: 
IFN Working Paper No. 1331
Publisher: 
Research Institute of Industrial Economics (IFN), Stockholm
Abstract: 
Politicians and international organisations advocate for increased regulation and government control of industry in order to handle climate change and reduce overall greenhouse gas emissions. However, it remains an open question how economic freedom is associated with environmental damage and whether deregulation is harmful to the environment or incentivises the use of green technology. On one hand, more government control and regulation may force firms and individuals to reduce their emissions. On the other hand, more economic freedom is likely to enable innovation and the adoption of green technological development. In this paper, I therefore combine data on growth in greenhouse gas emissions and GDP per capita with the Fraser Institute's Economic Freedom of the World indices in order to test if economic freedom affects emissions. I do so in the context of estimating a standard Environmental Kuznets Curve in which economic freedom can both reduce overall levels as well as shift the shape of the curve. The results suggest that economic freedom reduces greenhouse gas emissions but also shifts the top point of the Kuznets Curve to the left. Part of this effect may be due to the effect of economic freedom on the adoption of renewable energy.
Subjects: 
Economic freedom
Environmental performance
Greenhouse gases
Kuznets Curves
JEL: 
H23
O31
P16
Q55
Document Type: 
Working Paper

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